Mayor Kathy Sheehan has struck a deal to infuse the city's economic development arm -— but not city coffers — with $11 million over the next decade in exchange for Albany's support for the proposed East Greenbush casino.

The pact also includes a pledge by Saratoga Harness Racing Inc., one of the principals behind the proposed Capital View Casino and Resort, to try to steer "no fewer than 25 percent" of jobs at the $300 million destination to Albany residents.

The developer would also try to spend at least $5 million annually at city businesses and commit to stock its guest rewards program with at least $50,000 worth of gift cards and vouchers from Albany businesses every year.

In money alone, the offer eclipses one from the city of Rensselaer by a $1 million -yet would not require Albany officials to pledge their exclusive support to the East Greenbush project -— a demand by Rensselaer that Sheehan has sharply resisted.

That appears to remain a major roadblock between Albany and Rensselaer, which did not budge Wednesday from its insistence on exclusivity.

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In a bid to bolster the case of the competing $280 million Hard Rock Hotel and Casino before the state's Gaming Commission, Rensselaer Mayor Dan Dwyer offered Albany $1 million a year for a decade out of Rensselaer taxpayers' projected $5.7 million annual share of gambling revenue.

That's a key difference from the East Greenbush offer, under which all the money would come from the coffers of Saratoga Harness Racing -— a fact touted by East Greenbush Supervisor Keith Langley.

"Unlike other agreements, I'm proud to say that this agreement is not funded with one penny of public funds," Langley said Wednesday standing beside Sheehan at City Hall.

But the $11 million would not flow directly to Albany's general fund, where it could be tapped virtually without restriction -to fund city services or plug the a multimillion-dollar budge gap.

Instead, Saratoga Harness Racing would make the payments to the Capitalize Albany Corp., a local development corporation that leverages private investment to promote economic growth in the city.

Though legally distinct from city government, Capitalize Albany's operations are subject to state oversight and have long been closely intertwined with those of the city's planning and development offices, with the city planning commissioner also serving as president of the local development corporation.

Still, some members of the Common Council questioned the wisdom of steering the payments to Capitalize Albany, an entity governed by a board of business and civic leaders but over which the city has no direct control.

Councilman Frank Commisso Jr. called the arrangement "a way to funnel dollars to private interests."

But Sheehan countered that the city expects to strike a separate agreement with Capitalize Albany over how the money can be spent. Using the money to fund growth will build Albany's tax base in the long run, she said, while meeting the intent of the law that legalized casino gambling in New York.

"The purpose of this act is to drive economic development in upstate New York, and in the city of Albany that means jobs for our residents, but it also means very important economic development investment," Sheehan said, adding that the $1 million annual payments would do little to help taxpayers in the long run if they don't spur larger changes to the city's tax structure.

"If we don't grow the tax base," she said, "we're bailing out the ship, but we're not doing anything to fix the holes in it."

It remains unclear if the council will act to bless the deal. Sheehan said the East Greenbush team would welcome the gesture, but added that she believes she can sign the pact without lawmakers' consent.

Rita Cox, a spokeswoman for the East Greenbush team, would not directly say whether council support is a condition of the offer ---— but seemed to suggest it isn't.

"We've made this commitment, and if we win the license, we intend to fulfill it," Cox said.

Council President Carolyn McLaughlin, who has fought for jobs access for those in the city's minority communities, said the council should be heard.

"The council has to express themselves some way as a partner in this," she said.

Last week, the council passed a resolution conditionally supporting the Rensselaer project, but that resolution was not exclusive and negotiations appear to have bogged down.

Dwyer said his city has no plans at the moment to counter East Greenbush's offer or back down from its exclusivity demand. Sheehan, meanwhile, said she is waiting for Rensselaer to provide more details beyond a one-page summary.

Dwyer faulted the East Greenbush proposal for lacking some solid guarantees and for having the potential to harm Albany's businesses.

"I hope Mayor Sheehan knows that there's going to be four hotels in a two-mile radius of East Greenbush," he said. "It's going to hurt her hotels and restaurants."

The Hard Rock, just across the Hudson River from Albany, would be a boon for downtown businesses, he said.

The riverfront Rensselaer site is considered shovel-ready, while East Greenbush needs a planned development district with approvals from the town planning and zoning boards that could require lengthy reviews.

Albany's support isn't required. But of the four teams competing for what will likely be one casino license in the Capital Region, both Rensselaer and East Greenbush have courted the capital city to burnish their applications. The other two sites are further away in Schenectady and Schoharie County.

The Troy City Council voted unanimously earlier this year to back both the East Greenbush and Rensselaer proposals without receiving direct financial incentives.

Albany Councilman Michael O'Brien, who supported the Rensselaer resolution, welcomed the offer from East Greenbush.

"It's a bird in hand," O'Brien said. "It is the only bird in hand so far."